Peugeot hits new earnings record despite Opel loss

PSA Group shrugged off losses at the newly acquired Opel division to lift sales, profit and operating margin to new records in 2017, the French carmaker said on Thursday.

The maker of Peugeot, Citroen, Opel and Vauxhall cars said net income rose 11.5 percent to 1.93 billion euros (US$2.35 billion) on 65.21 billion euros in revenue, up 20.7 percent.

Carlos Tavares, chief executive officer of PSA, said that “2017 was indeed a remarkable year.”

He added that “the beginning of 2018, despite all of the risks that many of us could see, is starting very well.” He said that “the most important” issue is that the firm’s accounting has seen the first results of the implementation of the Opel turnaround plan.

Operating income rose almost a quarter to 3.99 billion euros after a 157 million euro Opel loss in the last five months of the year, following the consolidation of the former General Motors business.

The group automotive operating margin fell to 5.9 percent from 6 percent.

Reiterating mid-term goals that include a 6 percent margin excluding Opel for 2021 – compared with 7.3 percent last year – Chief Financial Officer Jean-Baptiste de Chatillon said the targets will be reviewed early next year and could be raised.

“We are certainly doing quite well right now,” Chatillon said as he presented the earnings numbers to reporters. “Let’s see in 2019.”

PSA’s full-year results beat analyst expectations of 1.9 billion euros in net income, 3.53 billion in operating profit and 64.68 billion in revenue, based on the median estimates in an Inquiry Financial poll for Reuters.

The French carmaker raised its proposed dividend to 0.53 euros per share from the 0.48 euro payout on 2016 earnings.